Case of Amazon

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Since 1994, Amazon has been known worldwide as the largest online retailer. Since its establishment, the company has kept its continuous innovation mode of operation, maintaining its growth at a constant rate. What are the key drivers that persistently bring the company the success in generating escalated revenue? The first driver and also the motto of Amazon’s business model is the company’s ability to offer its customers a wide range of products within low pricing barriers. The goods offered on its Web-service are extremely varied and price competitive, comparing with other big players in the industry.

At the launch time, books are the initial product of Amazon, which relies heavily on third-party distributors. As its business continues to grow up, it offers the consumers more choices in product selection such as toy, electronics and tools. Recently, Amazon also develop its own Kindle book reader and tablets, allowing customers to download e-books and applications from its own database, turning itself into a major provider of cloud computing service. The variety of items and the competition from other e-commerce retailers forces Amazon to invest significantly in supply chain and distribution network, since it cannot rely on third-party distributors like doing with books. This gigantic distribution channel and technology infrastructure allows Amazon to serve a massive number of customers with various product categories, taking advantage of the economics of scale at open the gate to other opportunities lately.

An obvious example of advantages that distribution and technology investment bring to Amazon is the expansion of its retail model into a platform for e-commerce, a stage that make Amazon a big competitor of eBay in the platform industry. In this new adapted retail model, sellers are considered as a potential source of revenue as the consumers. Amazon exploits the cross-side network effect of its available platform to attract more and more sellers, and...
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